India has many categories of traders, including day and swing traders. Day traders focus on buying and selling the stock on the same day, whereas swing traders hold it for a few days or weeks to make profits. Swing trades aim to capitalise on buying and selling at the interim lows and highs with an overall larger trend. Swing Trading lies between Day and Long-Term Trading.
It follows the concept of making a series of little gains to a significant profit. It is subject to market risks, and every trade might not be favourable. Through technical analysis, it captures short-term opportunities in the market.
Key tools
You should identify the chart trends and capitalise on them. The company share price can either be in an uptrend, downtrend, or sideways trend. An uptrend is when the chart makes higher highs and higher lows with time. Similarly, a downtrend is when the share price forms lower highs and lower lows with time. A sideways trend is when the share price oscillates within a fixed range. For swing traders, only the uptrend phase is of interest.
Once there is a conviction of an uptrend through technical analysis, traders can take positions. Here are the essential tools and indicators to follow:
Support
It is the point from which the stock’s falling price may reverse. A support level is where traders place a Buy order. The support line for a time frame is drawn by connecting all the low points on the chart within it.
Resistance
A Resistance level is the price point where a stock’s rising price may reverse. Generally, a support line for a time frame is drawn by connecting all the high points on the chart within that period.
Simple Moving Average
It measures the share’s average price within a selected timeframe that helps to determine whether the current market price is above the Average Price. Besides, it is important to learn how to open a Demat Account to trade in the Indian Share Market.
Relative Strength Index
It identifies whether the market is overbought or oversold. Usually, traders consider an RSI above 70 as an overbought situation and an RSI below 30 as an oversold situation.
Pre-requisites
To invest in the Stock Markets, all investors must understand what is a Demat Account. It holds financial securities in digital form and helps you trade. The National Securities Depository Limited and Central Depository Services Limited maintain them in India.
Swing Trading is an attractive trading opportunity. Understanding how to find stocks and knowing indicators can help derive optimum benefits. Professional and non-professional investors can participate in it to gain potential profits.
Conclusion
You can choose to be a long-term investor, day trader, or swing trader based on your financial needs. The objective is to invest money in stocks and make profits by exiting at the right time.
